Toronto Dominion Bank 2

On my other blog I am today writing about Bloggers Portfolios continue...

I own this stock of Toronto Dominion Bank (TSX-TD, NYSE-TD). This stock, as all banks, was on Mike Higgs' Canadian Dividend Growth Stock list and the other dividend lists that I followed. When I sold some Metro in 2009, I bought this stock. It is the 3rd bank stock I bought.

When I look at insider trading, I find $79.5M of inside selling and $78.6M of net insider selling with some insider buying at $1.7M. The net insider selling is at 0.08% of market cap and therefore is a relatively small amount.

The outstanding shares were increased last year by 5M shares with a book value of $199M. The value of this number of shares was $277.4M at the end of October 2014. This number of shares is 0.27% of the outstanding shares and is therefore a relatively small number.

There is some insider ownership with the CEO owing shares worth around $17.5M, the CFO owning shares worth around $5.7M and another officer owning shares worth around $19.2M. On the other hand these three people own around 0.04% of the outstanding shares and therefore a relatively small amount of the outstanding shares.

What I am looking for is a mission statement that the company wants to do well by their customers, employees, and community and thereby earn shareholders a reasonable return. As with most stocks I have reviewed so far, I cannot find a mission statement per se. However, I did find the following statements. Our Mission is we will be the Best Run, Customer-Focused, Integrated Financial Institution, with a Unique and Inclusive Employee Culture. Our Strategy is to produce long-term, profitable growth by building great franchises and delivering value to our Customers, Shareholders and Communities.

The 5 year low, median and high median Price/Earnings Ratios are 11.40, 12.63 and 13.84. The corresponding 10 year P/E Ratios are 11.41, 12.76 and 13.95 which are very close. The current P/E Ratio is 11.24 based on a stock price of $50.02 and 2015 EPS Estimates $4.45. This stock price test suggests that the stock is relatively cheap.

I get a Graham Price $53.46. The 10 year low, median and high median Price/Graham Price Ratios are 0.88, 1.00 and 1.11. The current P/GP Ratio is 0.94 based on a stock price of $50.02. This stock price test suggests that the stock price is relatively reasonable. However, on an absolute basis a P/GP Ratio below 1.00 suggests that the stock price is cheap.

The 10 year median Price/Book Value per Share is 1.72 and the current P/B Ratio is 1.75 based on a stock price of $50.02 and a BVPS of $28.54. The current P/B Ratio is just 2% higher than the 10 year median P/B Ratio. This stock price test suggests that the stock price is relatively reasonable.

The current dividend yield is 3.76%. The 5 year median, historical average and historical median dividend yields are 3.52%, 3.49% and 3.40% all values lower than the current dividend yield. The 5 year median, historical average and historical median dividend yields 6.8%, 7.85% and 10.54% lower than the current dividend yield. This stock price test suggests that the stock price is relatively reasonable. Although the stock price is relatively lower than the median and therefore shows it is at a good price.

When I look at the analysts' recommendations, I find Strong Buy, Buy and Hold recommendations. The consensus recommendation is a Buy. The 12 month stock price consensus is $60.20. This implies a total return of 24.11% with 20.35% from capital gains and 3.76% from dividends.

A report by the Motley Fool is rather positive about this bank. Another Motley Fool report by Benjamin Sinclair says why Canadian Retirees should own this bank. There is a recent Seeking Alpha report by Juri Zguri on this bank. The web site of Legacy talks about recent recommendations for this bank.

Sound bite for Twitter and StockTwits is: Stock price cheap to reasonable. On most of the testing the current stock price is showing a better than past median relative prices. This probably shows that now is a good time to buy if you want to hold this stock. See my spreadsheet at td.htm.

This is the second of two parts. The first part was posted on Friday, January 16, 2015 and is available here. The first part talks about the stock and the second part talks about the stock price.

The TD bank is a bank with a full range of financial products and services for individuals and corporations in Canada, USA and internationally. Financial products and services include Canadian Personal and Commercial Banking; Wealth Management; U.S. Personal and Commercial Banking; and Wholesale banking products. Its web site is here TD Bank.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.